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Write about CAPM in 1000 words. 3 or More reference that are cited in APA format. The opening is attached below:
The Capital Asset Pricing Model (CAPM)
In various economies across the world, investment is one on the methods through which individuals and companies guarantee that they shall be able to succeed even when a period of hardship arises. Because of this reason, may people invest in different types of ways, but one thing is sure, 99% of investors are risk averse – meaning that an investor does not like to lose. This reminds me of my own personal experience with investment. I often research every single financial statement that the company has ever released and read through their growth trend before deciding. Certainly, an investor wants his invested shares to yield more interest possibly more than projected and thus, this would be considered a good investment.
As a result of the fears and doubts that investors face and battle with before making a decision on purchasing an item, CAPM – Capital asset pricing model becomes a great risk prediction mechanism that allows for a rough margin of precision when calculating risk. CAPM is a model that is used in larger corporation that trade publicly and it is used in creating an estimation of what the cost of equity and capital is projected to amount to. About 73.5% of financial executives make use of CAPM (Harvey, 2001).
